Electric vehicle manufacturer Rivian has maintained its stance against price reductions, with CEO RJ Scaringe revealing that new orders are contributing to an increase in the average selling price (ASP) of its vehicles. Following a successful Q3 performance that surpassed earnings expectations, Scaringe stated that average selling prices are consistently “trending upwards.”
In an interview with Bloomberg TV, Scaringe explained, “There's an evolution of our average selling price which continues to trend upwards as we move into new orders.”
Throughout the year, Rivian has witnessed a steady improvement in gross profit per vehicle delivered. Despite incurring a loss of approximately $31,000 per vehicle in the third quarter, this marks a significant improvement from the Q3 loss of $139,277 per vehicle in the previous year.
Scaringe attributed the positive shift to changes in material costs, plant upgrades, and “fixed cost absorption from running higher volumes.”
Having produced 16,304 vehicles in Q3, Rivian has increased its 2023 production guidance to 54,000. The company's deliveries also experienced a 24% rise in Q3.
Rivian continues to address its backlog of early orders, many of which were priced around $20,000 less than current rates. CFO Claire McDonough indicated that the full impact of new technologies, such as its in-house Enduro motors, would drive down material costs in the coming year.
Following a planned shutdown in Q2 2024, Rivian intends to introduce several new technologies to the R1 platform. The company anticipates a substantial reduction in material costs, positioning itself for an improved margin profile by the end of 2024.
While acknowledging the downtime's impact on Q2 and Q3, Rivian aims for Q4 to become the “run rate potential for the business,” ramping up production for both R1 and commercial volumes. McDonough highlighted that fulfilling pre-3/1/2022 preorders would contribute to a notable step change in the average selling price over that period.
Additionally, Rivian terminated its exclusivity agreement with Amazon, opening the door to sell its electric delivery vans to a broader customer base. Scaringe mentioned ongoing discussions with a “pipeline” of potential customers.
Looking ahead, Rivian plans to unveil a prototype of its R2 compact electric SUV in early 2024, offering a more affordable option while maintaining the brand's quality standards.